French officials to visit India to salvage $20bn Rafale jet deal

The bone of contention is the assembly of the fighter aircraft in India.

A view of the Rafale jet assembly in a Dassault Aviation factory in Merignac near Bordeaux, southwestern FranceReuters

A French delegation is to visit New Delhi this month to rescue Dassault Aviation's multi-billion dollar bid to sell 126 Rafale combat jets to the Indian Air Force.

An "empowered" delegation from France, with powers to take decisions on key points instead of referring them back to Paris, is expected to visit India to iron-out issues, Reuters reported.

The Rafale deal has reportedly hit a hurdle over the assembly of aircraft in India, threatening to derail one of the world's biggest defence deals, which has been in the works since 2012.

An unnamed Indian defence source said price negotiations were on hold until the issue of licensed production was resolved in line with the original request for proposals (RFP) floated by the Indian defence ministry.

Military experts now say the deal could cost India $20bn (£13bn, €17bn), double the original estimate, owing to the benchmarking of aircraft prices and a roughly 5% annual cost increase.

Pursued by Reuters, Dassault and the French defence ministry were not immediately available for comment.

Bone of contention

India wants France's Dassault to take full responsibility for the production of the jets at a state-run facility in Bangalore under the 2012 bid offer.

France has said it will help Hindustan Aeronautics (HAL) stick to delivery schedules, but that it cannot give guarantees for production of the aircraft built at a facility over which it has no control.

For the French, the deal will be a major boost for domestic defence manufacturing, with the first 18 Rafale planes built in France.

Rahul Bedi, a defence analyst at IHS Jane's, told the news agency: "The credibility of India [as an arms buyer] is already pretty shaky and it's going to get shakier [if New Delhi cancels the Rafale deal].

"It would be a big blow to the [Indian] armed forces. The armed forces have been banking on the Rafale for a long time. They have said there is no plan B."

France said last month that its bid to supply the Rafale jets to India will require more negotiations between Paris and New Delhi.

In November 2014, Dassault Aviation chief executive Eric Trappier said that a contract by the end of March 2015 was a "reasonable goal."

New Delhi picked the Rafale fighters over the Eurofighter Typhoon fighter, made by EADS and financed by a four-nation consortium that includes Britain, Germany, Spain and Italy, for the Indian Airforce in 2012.

Dassault also beat US bidders Boeing and Lockheed Martin, Sweden's Saab and the Russian makers of the MiG-35.

Rafale also has a naval variant which could interest the Indian military in the future.